The Secretary of State to the Minister in China ( MacMurray )
Sir: The Department has received your despatch No. 963, of March 16, 1927, transmitting your comments on a general policy throughout China with regard to the payment by American citizens of local municipal taxes.
The Department notes your segregation of the different types of Chinese municipalities into more or less distinct categories and approves your suggestion that the policy to be followed should be adapted to the different circumstances encountered.
It seems necessary to observe, in regard to the taxation of American citizens residing either in foreign concessions or in areas that were formerly foreign concessions but are now controlled by Chinese authorities, that American consular officials should be careful to avoid entering into any commitment as to the enforcibility of municipal regulations and taxes in the consular courts. Since this is a question of legal interpretation, it can be answered only by a judicial ruling in an appropriate case. (See in this connection the Department’s telegram No. 131 of May 25, 1922, concerning the Kuling Estate).44 The Department expects, nevertheless, to be given the opportunity to express an opinion, if it desires to do so, regarding municipal regulations designed to be applicable to American citizens, in order that it may ascertain whether the rights properly enjoyed by such citizens are infringed upon.
In regard to Chinese municipalities other than those embraced within the categories already mentioned, the Department concurs in your view that it would be desirable to instruct American citizens, when demands are made by the Chinese authorities for the payment of municipal taxes, that the American Government advises them to pay, as a voluntary contribution, the rates levied on Chinese and other foreign citizens, when such rates are, in the opinion of the Legation, reasonable and when appropriate municipal services are rendered in return.
It is desired that you issue a circular instruction to American consular officials in China in this sense, or special instructions as the necessity therefor may arise, as you deem most appropriate. The Department desires that the Legation should keep it fully informed in regard to developments in these matters.
I am [etc.]
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